MOFG MidWestOne Financial Group

MidWestOne Financial Group, Inc. (Nasdaq: MOFG) (“we”, “our”, or the "Company”) today reported results for the third quarter of 2023.

Third Quarter 2023 Highlights1

• Net income of $9.1 million, or $0.58 per diluted common share, compared to net income of $7.6 million, or $0.48 per diluted common share, for the linked quarter.
• Annualized loan growth of 4.8%.
• Core deposits increased $83.2 million or 2%.
• Nonperforming assets ratio of 0.45%; net charge-off ratio was 0.04%.
• Efficiency ratio improved to 66.06%.
• Announced sale of Florida operations and acquisition of Denver Bankshares, Inc. ("Denver Bankshares") in strategic geographic repositioning.

Subsequent Events

• On October 24, 2023, the Board of Directors declared a cash dividend of $0.2425 per common share.

CEO COMMENTARY

Charles (Chip) Reeves, Chief Executive Officer of the Company, commented, “Despite the difficult interest rate environment, which continues to compress our net interest margin, we had another strong quarter of strategic plan execution, highlighted by the September announcement of the sale of our Florida operations, with the proceeds reinvested into the acquisition of Denver Bankshares. These two transactions align our geographic footprint with our Strategic Plan, while accelerating our Denver market growth by three to four years. We are confident in our ability to integrate this low-risk merger, while continuing our growth trajectory in the attractive Denver MSA. Also, in the third quarter of 2023, our Treasury Management initiatives and client acquisition strategies resulted in balanced loan and deposit growth, providing ample flexibility for future, selective loan growth. Asset quality metrics were affected by one senior living credit moving to non-accrual, however, charge-offs and 30-89 day past dues remain at historically low levels. We remain diligent as uncertain economic conditions begin to normalize asset quality migration.”

Mr. Reeves continued, “While we continue to invest for growth, we are also laser focused on improving our operational effectiveness. Expenses in the quarter were well-controlled and our cost savings initiative to reduce noninterest expense by 2.5% is well underway. To conclude, we've made substantial progress executing our strategic initiatives over the last two quarters, and while we have more to do, I could not be more pleased with our team and the execution of our strategic initiatives.”

_______________1 Third Quarter Summary compares to the second quarter of 2023 (the "linked quarter") unless noted.

		As of or for the quarter ended												Nine Months Ended
(Dollars in thousands, except per share amounts and as noted)		September 30,				June 30,				September 30,				September 30,				September 30,
			2023				2023				2022				2023				2022
Financial Results
Revenue		$	44,436			$	45,708			$	58,321			$	126,174			$	159,373
Credit loss expense			1,551				1,597				638				4,081				3,920
Noninterest expense			31,544				34,919				34,623				99,782				98,348
Net income			9,138				7,594				18,317				18,129				44,833
Per Common Share
Diluted earnings per share		$	0.58			$	0.48			$	1.17			$	1.15			$	2.86
Book value			32.21				31.96				30.23				32.21				30.23
Tangible book value(1)			26.60				26.26				24.17				26.60				24.17
Balance Sheet & Credit Quality
Loans In millions		$	4,066.0			$	4,018.6			$	3,746.3			$	4,066.0			$	3,746.3
Investment securities In millions			1,958.5				2,003.1				2,299.9				1,958.5				2,299.9
Deposits In millions			5,363.3				5,445.4				5,476.8				5,363.3				5,476.8
Net loan charge-offs In millions			0.5				0.9				0.6				1.7				3.1
Allowance for credit losses ratio			1.27	%			1.25	%			1.39	%			1.27	%			1.39	%
Selected Ratios
Return on average assets			0.56	%			0.47	%			1.13	%			0.37	%			0.97	%
Net interest margin, tax equivalent(1)			2.35	%			2.52	%			3.08	%			2.54	%			2.92	%
Return on average equity			7.14	%			6.03	%			14.56	%			4.81	%			11.81	%
Return on average tangible equity(1)			9.68	%			8.50	%			19.32	%			7.03	%			15.28	%
Efficiency ratio(1)			66.06	%			71.13	%			53.67	%			66.40	%			56.70	%

(1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.

REVENUE REVIEW

Revenue														Change					Change
														3Q23 vs					3Q23 vs
(Dollars in thousands)		3Q23				2Q23				3Q22				2Q23					3Q22
Net interest income		$	34,575			$	36,962			$	45,733				(6	)%			(24	)%
Noninterest income			9,861				8,746				12,588				13	%			(22	)%
Total revenue, net of interest expense		$	44,436			$	45,708			$	58,321				(3	)%			(24	)%

Total revenue for the third quarter of 2023 decreased $1.3 million from the second quarter of 2023 as a result of lower net interest income, partially offset by higher noninterest income. Compared to the third quarter of 2022, total revenue decreased $13.9 million due to lower net interest income and noninterest income.

Net interest income of $34.6 million for the third quarter of 2023 decreased $2.4 million from the second quarter of 2023 and $11.2 million from the third quarter of 2022 as a result of higher funding costs and volumes and lower interest earning asset volumes, partially offset by higher interest earning asset yields.

The Company's tax equivalent net interest margin was 2.35% in the third quarter of 2023 compared to 2.52% in the second quarter of 2023, as higher earning asset yields were more than offset by increased funding costs. The cost of interest bearing liabilities increased 35 basis points ("bps") to 2.33%, due to interest bearing deposit costs of 2.05%, short-term borrowing costs of 4.29%, and long-term debt costs of 6.78%, which increased 26 bps, 138 bps and 40 bps, respectively from the second quarter of 2023. Total interest earning assets yield increased 12 bps from the second quarter of 2023, as a result of an increase in loan and securities yields of 14 bps and 1 bp, respectively. Our cycle-to-date interest bearing deposit beta was 34%.

The tax equivalent net interest margin was 2.35% in the third quarter of 2023 compared to 3.08% in the third quarter of 2022, driven by higher funding costs and volumes, partially offset by higher interest earning asset yields. The cost of interest bearing liabilities increased 169 bps to 2.33%, due to interest bearing deposit costs of 2.05%, short-term borrowing costs of 4.29%, and long-term debt costs of 6.78%, which increased 159 bps, 295 bps and 208 bps, respectively from the third quarter of 2022. Total interest earning assets yield increased 67 bps from the third quarter of 2022, primarily as a result of an increase in loan and securities yields of 75 bps and 9 bps, respectively.

Noninterest Income													Change				Change
													3Q23 vs				3Q23 vs
(In thousands)	3Q23				2Q23				3Q22				2Q23				3Q22
Investment services and trust activities	$	3,004			$	3,119			$	2,876				(4	)%			4	%
Service charges and fees		2,146				2,047				2,075				5	%			3	%
Card revenue		1,817				1,847				1,898				(2	)%			(4	)%
Loan revenue		1,462				909				1,722				61	%			(15	)%
Bank-owned life insurance		626				616				579				2	%			8	%
Investment securities gains (losses), net		79				(2	)			(163	)			n / m				(148	)%
Other		727				210				3,601				246	%			(80	)%
Total noninterest income	$	9,861			$	8,746			$	12,588				13	%			(22	)%
Results are not meaningful (n/m)

Noninterest income for the third quarter of 2023 increased $1.1 million from the linked quarter due primarily to a $0.6 million favorable change in loan revenue, coupled with a $0.5 million increase in other revenue. Loan revenue reflected a favorable quarter-over quarter change in the fair value of our mortgage servicing rights of $0.9 million, partially offset by a decrease in loan sale gains generated by our governmental lending business and a decrease in revenue in our mortgage origination business. Other revenue reflected an increase of $0.6 million in swap origination fee income. Noninterest income decreased $2.7 million from the third quarter of 2022, primarily due to the decline of $2.9 million in other revenue stemming from a one-time settlement recognized in the third quarter of 2022.

EXPENSE REVIEW

Noninterest Expense													Change			Change
													3Q23 vs			2Q23 vs
(In thousands)	3Q23				2Q23				3Q22				2Q23			3Q22
Compensation and employee benefits	$	18,558			$	20,386			$	20,046			(9	)%		(7	)%
Occupancy expense of premises, net		2,405				2,574				2,577			(7	)%		(7	)%
Equipment		2,123				2,435				2,358			(13	)%		(10	)%
Legal and professional		1,678				1,682				2,012			—	%		(17	)%
Data processing		1,504				1,521				1,731			(1	)%		(13	)%
Marketing		782				1,142				1,139			(32	)%		(31	)%
Amortization of intangibles		1,460				1,594				1,789			(8	)%		(18	)%
FDIC insurance		783				862				415			(9	)%		89	%
Communications		206				260				302			(21	)%		(32	)%
Foreclosed assets, net		2				(6	)			42			(133	)%		(95	)%
Other		2,043				2,469				2,212			(17	)%		(8	)%
Total noninterest expense	$	31,544			$	34,919			$	34,623			(10	)%		(9	)%

Merger-related Expenses
(In thousands)	3Q23				2Q23				3Q22
Compensation and employee benefits	$	—			$	—			$	132
Equipment		—				—				14
Legal and professional		11				—				193
Data processing		—				—				304
Marketing		—				—				90
Other		—				—				30
Total merger-related expenses	$	11			$	—			$	763

Noninterest expense for the third quarter of 2023 decreased $3.4 million, or 9.7%, from the linked quarter with overall decreases in all noninterest expense categories except foreclosed assets, net. The decrease in compensation and employee benefits reflected a reduction of $1.1 million in severance expense, as well as a reduction of $1.1 million in medical insurance benefit expense, driven primarily by accrual adjustments. The $0.4 million decline in other noninterest expense was driven by various changes, including $0.2 million of executive relocation expense recognized in the linked quarter that did not recur and reduced loan expenses by $0.2 million. The $0.4 million decrease in marketing reflected a decline in advertising and sponsorships.

Noninterest expense for the third quarter of 2023 decreased $3.1 million, or 8.9%, from the third quarter of 2022, with overall decreases in all noninterest expense categories except FDIC insurance. These decreases primarily reflected a $1.8 million decline in employee benefits and incentives and commission expense, coupled with a $0.8 million decrease in merger-related expenses.

The Company's effective income tax rate increased to 19.4% in the third quarter of 2023 compared to 17.4% in the linked quarter. The higher effective income tax rate reflected an adjustment to the full-year 2023 estimated taxable income in the Company's annual effective tax rate calculation. The effective income tax rate for the full year 2023 is expected to be in the range of 18% - 20%.

BALANCE SHEET REVIEW

Total assets were $6.47 billion at September 30, 2023, compared to $6.52 billion at June 30, 2023 and $6.49 billion at September 30, 2022. The decrease from June 30, 2023 was driven by lower cash and securities balances, partially offset by higher loan balances. Compared to September 30, 2022, the decrease was due primarily to lower securities balances resulting from the balance sheet repositioning executed in the first quarter of 2023 as well as lower cash balances, partially offset by higher loan balances.

Loans Held for Investment	September 30, 2023								June 30, 2023								September 30, 2022
(Dollars in thousands)		Balance				% of Total				Balance				% of Total				Balance				% of Total
Commercial and industrial	$	1,078,773				26.5	%		$	1,089,269				27.1	%		$	1,041,662				27.8	%
Agricultural		111,950				2.8				106,148				2.6				116,229				3.1
Commercial real estate
Construction and development		331,868				8.2				313,836				7.8				276,941				7.4
Farmland		182,621				4.5				183,378				4.6				183,581				4.9
Multifamily		337,509				8.3				305,519				7.6				222,592				5.9
Other		1,324,019				32.5				1,331,886				33.1				1,226,983				32.8
Total commercial real estate		2,176,017				53.5				2,134,619				53.1				1,910,097				51.0
Residential real estate
One-to-four family first liens		456,771				11.2				448,096				11.2				446,373				11.9
One-to-four family junior liens		173,275				4.3				168,755				4.2				157,276				4.2
Total residential real estate		630,046				15.5				616,851				15.4				603,649				16.1
Consumer		69,183				1.7				71,762				1.8				74,652				2.0
Loans held for investment, net of unearned income	$	4,065,969				100.0	%		$	4,018,649				100.0	%		$	3,746,289				100.0	%
Total commitments to extend credit	$	1,251,345							$	1,296,719							$	1,159,323

Loans held for investment, net of unearned income, increased $47.3 million, or 1.2%, to $4.07 billion from $4.02 billion at June 30, 2023. This increase was driven by new loan production in the third quarter of 2023.

Investment Securities	September 30, 2023								June 30, 2023								September 30, 2022
(Dollars in thousands)	Balance					% of Total			Balance					% of Total			Balance					% of Total
Available for sale	$	872,770				44.6	%		$	903,520				45.1	%		$	1,153,304				50.1	%
Held to maturity		1,085,751				55.4	%			1,099,569				54.9	%			1,146,583				49.9	%
Total investment securities	$	1,958,521							$	2,003,089							$	2,299,887

Investment securities at September 30, 2023 were $1.96 billion, decreasing $44.6 million from June 30, 2023 and $341.4 million from September 30, 2022. The decrease from the second quarter of 2023 was due primarily to paydowns, calls, and maturities. The decrease from the third quarter of 2022 was due primarily to the balance sheet repositioning executed in the first quarter of 2023.

Deposits	September 30, 2023								June 30, 2023								September 30, 2022
(Dollars in thousands)	Balance					% of Total			Balance					% of Total			Balance					% of Total
Noninterest bearing deposits	$	924,213				17.2	%		$	897,923				16.5	%		$	1,139,694				20.8	%
Interest checking deposits		1,334,481				24.9				1,397,276				25.7				1,705,289				31.2
Money market deposits		1,127,287				21.0				1,096,432				20.1				991,783				18.1
Savings deposits		619,805				11.6				585,967				10.8				700,843				12.8
Time deposits of $250 and under		703,646				13.1				648,586				11.9				537,616				9.8
Total core deposits		4,709,432				87.8				4,626,184				85.0				5,075,225				92.7
Brokered time deposits		220,063				4.1				365,623				6.7				—				—
Time deposits over $250		433,829				8.1				453,640				8.3				401,557				7.3
Total deposits	$	5,363,324				100.0	%		$	5,445,447				100.0	%		$	5,476,782				100.0	%

Total deposits declined $82.1 million, or 1.5%, to $5.36 billion from $5.45 billion at June 30, 2023. Brokered deposits decreased $145.6 million from $365.6 million at June 30, 2023. Core deposits increased $83.2 million from June 30, 2023.

Borrowed Funds	September 30, 2023								June 30, 2023								September 30, 2022
(Dollars in thousands)	Balance					% of Total			Balance					% of Total			Balance					% of Total
Short-term borrowings	$	373,956				75.0	%		$	362,054				74.2	%		$	304,536				66.4	%
Long-term debt		124,526				25.0	%			125,752				25.8	%			154,190				33.6	%
Total borrowed funds	$	498,482							$	487,806							$	458,726

Total borrowed funds were $498.5 million at September 30, 2023 an increase of $10.7 million from June 30, 2023 and an increase of $39.8 million from September 30, 2022. The increase when compared to the linked quarter was due to increased Federal Home Loan Bank overnight borrowings, partially offset by a reduction in securities sold under agreements to repurchase. The increase when compared to September 30, 2022 was primarily due to Bank Term Funding Program borrowings of $225 million, as compared to no such borrowings in the prior year, partially offset by a reduction in securities sold under agreements to repurchase and Federal Home Loan Bank overnight borrowings.

Capital	September 30,				June 30,				September 30,
(Dollars in thousands)	2023 (1)					2023				2022
Total shareholders' equity	$	505,411			$	501,341			$	472,229
Accumulated other comprehensive loss		(84,606	)			(82,704	)			(96,623	)
MidWestOne Financial Group, Inc. Consolidated
Tier 1 leverage to average assets ratio		8.58	%			8.47	%			8.24	%
Common equity tier 1 capital to risk-weighted assets ratio		9.52	%			9.36	%			9.18	%
Tier 1 capital to risk-weighted assets ratio		10.31	%			10.15	%			9.97	%
Total capital to risk-weighted assets ratio		12.45	%			12.26	%			12.10	%
MidWestOne Bank
Tier 1 leverage to average assets ratio		9.51	%			9.42	%			9.31	%
Common equity tier 1 capital to risk-weighted assets ratio		11.43	%			11.31	%			11.26	%
Tier 1 capital to risk-weighted assets ratio		11.43	%			11.31	%			11.26	%
Total capital to risk-weighted assets ratio		12.36	%			12.22	%			12.17	%

(1) Regulatory capital ratios for September 30, 2023 are preliminary

Total shareholders' equity at September 30, 2023 increased $4.1 million from June 30, 2023, driven by the benefit of third quarter net income, partially offset by an increase in accumulated other comprehensive loss and dividends paid during the third quarter of 2023.

Accumulated other comprehensive loss at September 30, 2023 increased $1.9 million compared to June 30, 2023, primarily due to a decrease in available for sale securities valuations. Accumulated other comprehensive loss decreased $12.0 million from September 30, 2022.

On October 24, 2023, the Board of Directors of the Company declared a cash dividend of $0.2425 per common share. The dividend is payable December 15, 2023, to shareholders of record at the close of business on December 1, 2023.

No common shares were repurchased by the Company during the period June 30, 2023 through September 30, 2023 or for the subsequent period through October 26, 2023. The current share repurchase program allows for the repurchase of up to $15.0 million of the Company's common shares.

CREDIT QUALITY REVIEW

Credit Quality	As of or For the Three Months Ended
	September 30,				June 30,				September 30,
(Dollars in thousands)		2023				2023				2022
Credit loss expense related to loans	$	1,651			$	1,497			$	338
Net charge-offs		451				897				588
Allowance for credit losses		51,600				50,400				52,100
Pass	$	3,785,908			$	3,769,309			$	3,550,695
Special Mention / Watch		163,222				133,904				101,255
Classified		116,839				115,436				94,339
Loans greater than 30 days past due and accruing	$	6,449			$	6,201			$	5,960
Nonperforming loans	$	28,987			$	14,448			$	25,963
Nonperforming assets		28,987				14,448				26,066
Net charge-off ratio(1)		0.04	%			0.09	%			0.06	%
Classified loans ratio(2)		2.87	%			2.87	%			2.52	%
Nonperforming loans ratio(3)		0.71	%			0.36	%			0.69	%
Nonperforming assets ratio(4)		0.45	%			0.22	%			0.40	%
Allowance for credit losses ratio(5)		1.27	%			1.25	%			1.39	%
Allowance for credit losses to nonaccrual loans ratio(6)		178.63	%			355.03	%			208.18	%

(1) Net charge-off ratio is calculated as annualized net charge-offs divided by the sum of average loans held for investment, net of unearned income and average loans held for sale, during the period.(2) Classified loans ratio is calculated as classified loans divided by loans held for investment, net of unearned income, at the end of the period.(3) Nonperforming loans ratio is calculated as nonperforming loans divided by loans held for investment, net of unearned income, at the end of the period.(4) Nonperforming assets ratio is calculated as nonperforming assets divided by total assets at the end of the period.(5) Allowance for credit losses ratio is calculated as allowance for credit losses divided by loans held for investment, net of unearned income, at the end of the period.(6) Allowance for credit losses to nonaccrual loans ratio is calculated as allowance for credit losses divided by nonaccrual loans at the end of the period.

Compared to the linked quarter, nonperforming loans and assets ratios increased 35 bps and 23 bps, respectively, and when compared to the prior year increased 2 bps and 5 bps, respectively, to 0.71% and 0.45%, primarily due to the downgrade of a single commercial relationship.   

As of September 30, 2023, the allowance for credit losses was $51.6 million, or 1.27% of loans held for investment, net of unearned income, compared with $50.4 million, or 1.25% of loans held for investment, net of unearned income, at June 30, 2023. Credit loss expense of $1.6 million in the third quarter of 2023 was primarily attributable to loan growth.

Nonperforming Loans Roll Forward(Dollars in thousands)		Nonaccrual				90+ Days Past Due & Still Accruing				Total
Balance at June 30, 2023	$	14,196			$	252			$	14,448
Loans placed on nonaccrual or 90+ days past due & still accruing		16,394				140				16,534
Proceeds related to repayment or sale		(799	)			(1	)			(800	)
Loans returned to accrual status or no longer past due		(298	)			(252	)			(550	)
Charge-offs		(603	)			(39	)			(642	)
Transfers to foreclosed assets		(3	)			—				(3	)
Balance at September 30, 2023	$	28,887			$	100			$	28,987

CONFERENCE CALL DETAILS

The Company will host a conference call for investors at 11:00 a.m. CT on Friday, October 27, 2023. To participate, you may pre-register for this call utilizing the following link: https://www.netroadshow.com/events/login?show=03182047&confId=56188. After pre-registering for this event you will receive your access details via email. On the day of the call, you are also able to dial 1-833-470-1428 using an access code of 146099 at least fifteen minutes before the call start time. If you are unable to participate on the call, a replay will be available until January 25, 2024 by calling 1-866-813-9403 and using the replay access code of 205972. A transcript of the call will also be available on the Company’s web site (www.midwestonefinancial.com) within three business days of the call.

ABOUT MIDWESTONE FINANCIAL GROUP, INC.

MidWestOne Financial Group, Inc. is a financial holding company headquartered in Iowa City, Iowa. MidWestOne is the parent company of MidWestOne Bank, which operates banking offices in Iowa, Minnesota, Wisconsin, Florida, and Colorado. MidWestOne provides electronic delivery of financial services through its website, MidWestOne.bank. MidWestOne Financial Group, Inc. trades on the Nasdaq Global Select Market under the symbol “MOFG”.

Cautionary Note Regarding Forward-Looking Statements

This release contains certain “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. We and our representatives may, from time to time, make written or oral statements that are “forward-looking” and provide information other than historical information. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, the factors listed below. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “should,” “could,” “would,” “plans,” “goals,” “intend,” “project,” “estimate,” “forecast,” “may” or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, these statements. Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Additionally, we undertake no obligation to update any statement in light of new information or future events, except as required under federal securities law.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have an impact on our ability to achieve operating results, growth plan goals and future prospects include, but are not limited to, the following: (1) the risks of mergers or branch sales (including with Iowa First Bancshares Corp. and Denver Bankshares, Inc.), including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; (2) credit quality deterioration, pronounced and sustained reduction in real estate market values, or other uncertainties, including the impact of inflationary pressures on economic conditions and our business, resulting in an increase in the allowance for credit losses, an increase in the credit loss expense, and a reduction in net earnings; (3) the effects of recent and potential additional increases in inflation and interest rates, including on our net income and the value of our securities portfolio; (4) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (5) fluctuations in the value of our investment securities; (6) governmental monetary and fiscal policies; (7) changes in and uncertainty related to benchmark interest rates used to price loans and deposits; (8) legislative and regulatory changes, including changes in banking, securities, trade, and tax laws and regulations and their application by our regulators, including the new 1.0% excise tax on stock buybacks by publicly traded companies and any changes in response to the recent failures of other banks; (9) the ability to attract and retain key executives and employees experienced in banking and financial services; (10) the sufficiency of the allowance for credit losses to absorb the amount of actual losses inherent in our existing loan portfolio; (11) our ability to adapt successfully to technological changes to compete effectively in the marketplace; (12) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (13) the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, financial technology companies, and other financial institutions operating in our markets or elsewhere or providing similar services; (14) the failure of assumptions underlying the establishment of allowances for credit losses and estimation of values of collateral and various financial assets and liabilities; (15) volatility of rate-sensitive deposits; (16) operational risks, including data processing system failures or fraud; (17) asset/liability matching risks and liquidity risks; (18) the costs, effects and outcomes of existing or future litigation; (19) changes in general economic, political, or industry conditions, nationally, internationally or in the communities in which we conduct business, including the risk of a recession; (20) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (21) war or terrorist activities, including the Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemic, or other adverse external events, which may cause deterioration in the economy or cause instability in credit markets; (22) the occurrence of fraudulent activity, breaches, or failures of our information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; (23) the imposition of tariffs or other domestic or international governmental policies impacting the value of the agricultural or other products of our borrowers; (24) effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our customers, employees and supply chain; (25) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits; (26) the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time at other banks that resulted in failure of those institutions; and (27) other risk factors detailed from time to time in Securities and Exchange Commission filings made by the Company.

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES FIVE QUARTER CONSOLIDATED BALANCE SHEETS

	September 30,				June 30,				March 31,				December 31,				September 30,
(In thousands)		2023				2023				2023				2022				2022
ASSETS
Cash and due from banks	$	71,015			$	75,955			$	63,945			$	83,990			$	77,513
Interest earning deposits in banks		3,773				68,603				5,273				2,445				1,001
Total cash and cash equivalents		74,788				144,558				69,218				86,435				78,514
Debt securities available for sale at fair value		872,770				903,520				954,074				1,153,547				1,153,304
Held to maturity securities at amortized cost		1,085,751				1,099,569				1,117,709				1,129,421				1,146,583
Total securities		1,958,521				2,003,089				2,071,783				2,282,968				2,299,887
Loans held for sale		2,528				2,821				2,553				612				2,320
Gross loans held for investment		4,078,060				4,031,377				3,932,900				3,854,791				3,761,664
Unearned income, net		(12,091	)			(12,728	)			(13,535	)			(14,267	)			(15,375	)
Loans held for investment, net of unearned income		4,065,969				4,018,649				3,919,365				3,840,524				3,746,289
Allowance for credit losses		(51,600	)			(50,400	)			(49,800	)			(49,200	)			(52,100	)
Total loans held for investment, net		4,014,369				3,968,249				3,869,565				3,791,324				3,694,189
Premises and equipment, net		85,589				85,831				86,208				87,125				87,732
Goodwill		62,477				62,477				62,477				62,477				62,477
Other intangible assets, net		25,510				26,969				28,563				30,315				32,086
Foreclosed assets, net		—				—				—				103				103
Other assets		244,036				227,495				219,585				236,517				233,753
Total assets	$	6,467,818			$	6,521,489			$	6,409,952			$	6,577,876			$	6,491,061
LIABILITIES
Noninterest bearing deposits	$	924,213			$	897,923			$	989,469			$	1,053,450			$	1,139,694
Interest bearing deposits		4,439,111				4,547,524				4,565,684				4,415,492				4,337,088
Total deposits		5,363,324				5,445,447				5,555,153				5,468,942				5,476,782
Short-term borrowings		373,956				362,054				143,981				391,873				304,536
Long-term debt		124,526				125,752				137,981				139,210				154,190
Other liabilities		100,601				86,895				72,187				85,058				83,324
Total liabilities		5,962,407				6,020,148				5,909,302				6,085,083				6,018,832
SHAREHOLDERS' EQUITY
Common stock		16,581				16,581				16,581				16,581				16,581
Additional paid-in capital		301,889				301,424				300,966				302,085				301,418
Retained earnings		295,862				290,548				286,767				289,289				276,998
Treasury stock		(24,315	)			(24,508	)			(24,779	)			(26,115	)			(26,145	)
Accumulated other comprehensive loss		(84,606	)			(82,704	)			(78,885	)			(89,047	)			(96,623	)
Total shareholders' equity		505,411				501,341				500,650				492,793				472,229
Total liabilities and shareholders' equity	$	6,467,818			$	6,521,489			$	6,409,952			$	6,577,876			$	6,491,061

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES FIVE QUARTER AND YEAR TO DATE CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended																				Nine Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
(In thousands, except per share data)		2023				2023				2023				2022				2022				2023				2022
Interest income
Loans, including fees	$	51,870			$	49,726			$	46,490			$	43,769			$	40,451			$	148,086			$	104,515
Taxable investment securities		9,526				9,734				10,444				10,685				10,635				29,704				28,334
Tax-exempt investment securities		1,802				1,822				2,127				2,303				2,326				5,751				7,076
Other		374				68				244				—				9				686				77
Total interest income		63,572				61,350				59,305				56,757				53,421				184,227				140,002
Interest expense
Deposits		23,128				20,117				15,319				9,127				5,035				58,564				11,118
Short-term borrowings		3,719				2,118				1,786				1,955				767				7,623				1,115
Long-term debt		2,150				2,153				2,124				2,111				1,886				6,427				4,975
Total interest expense		28,997				24,388				19,229				13,193				7,688				72,614				17,208
Net interest income		34,575				36,962				40,076				43,564				45,733				111,613				122,794
Credit loss expense		1,551				1,597				933				572				638				4,081				3,920
Net interest income after credit loss expense		33,024				35,365				39,143				42,992				45,095				107,532				118,874
Noninterest income (loss)
Investment services and trust activities		3,004				3,119				2,933				2,666				2,876				9,056				8,557
Service charges and fees		2,146				2,047				2,008				2,028				2,075				6,201				5,449
Card revenue		1,817				1,847				1,748				1,784				1,898				5,412				5,426
Loan revenue		1,462				909				1,420				966				1,722				3,791				9,538
Bank-owned life insurance		626				616				602				637				579				1,844				1,668
Investment securities (losses) gains, net		79				(2	)			(13,170	)			(1	)			(163	)			(13,093	)			272
Other		727				210				413				2,860				3,601				1,350				5,669
Total noninterest income (loss)		9,861				8,746				(4,046	)			10,940				12,588				14,561				36,579
Noninterest expense
Compensation and employee benefits		18,558				20,386				19,607				20,438				20,046				58,551				57,665
Occupancy expense of premises, net		2,405				2,574				2,746				2,663				2,577				7,725				7,609
Equipment		2,123				2,435				2,171				2,327				2,358				6,729				6,366
Legal and professional		1,678				1,682				1,736				1,846				2,012				5,096				6,800
Data processing		1,504				1,521				1,363				1,375				1,731				4,388				4,199
Marketing		782				1,142				986				947				1,139				2,910				3,325
Amortization of intangibles		1,460				1,594				1,752				1,770				1,789				4,806				4,299
FDIC insurance		783				862				749				405				415				2,394				1,255
Communications		206				260				261				285				302				727				840
Foreclosed assets, net		2				(6	)			(28	)			48				42				(32	)			(66	)
Other		2,043				2,469				1,976				2,336				2,212				6,488				6,056
Total noninterest expense		31,544				34,919				33,319				34,440				34,623				99,782				98,348
Income before income tax expense		11,341				9,192				1,778				19,492				23,060				22,311				57,105
Income tax expense		2,203				1,598				381				3,490				4,743				4,182				12,272
Net income	$	9,138			$	7,594			$	1,397			$	16,002			$	18,317			$	18,129			$	44,833
Earnings per common share
Basic	$	0.58			$	0.48			$	0.09			$	1.02			$	1.17			$	1.16			$	2.86
Diluted	$	0.58			$	0.48			$	0.09			$	1.02			$	1.17			$	1.15			$	2.86
Weighted average basic common shares outstanding		15,689				15,680				15,650				15,624				15,623				15,673				15,658
Weighted average diluted common shares outstanding		15,711				15,689				15,691				15,693				15,654				15,696				15,686
Dividends paid per common share	$	0.2425			$	0.2425			$	0.2425			$	0.2375			$	0.2375			$	0.7275			$	0.7125

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIES FINANCIAL STATISTICS

	As of or for the Three Months Ended												As of or for the Nine Months Ended
	September 30,				June 30,				September 30,				September 30,				September 30,
(Dollars in thousands, except per share amounts)		2023				2023				2022				2023				2022
Earnings:
Net interest income	$	34,575			$	36,962			$	45,733			$	111,613			$	122,794
Noninterest income		9,861				8,746				12,588				14,561				36,579
Total revenue, net of interest expense		44,436				45,708				58,321				126,174				159,373
Credit loss expense		1,551				1,597				638				4,081				3,920
Noninterest expense		31,544				34,919				34,623				99,782				98,348
Income before income tax expense		11,341				9,192				23,060				22,311				57,105
Income tax expense		2,203				1,598				4,743				4,182				12,272
Net income	$	9,138			$	7,594			$	18,317			$	18,129			$	44,833
Per Share Data:
Diluted earnings	$	0.58			$	0.48			$	1.17			$	1.15			$	2.86
Book value		32.21				31.96				30.23				32.21				30.23
Tangible book value(1)		26.60				26.26				24.17				26.60				24.17
Ending Balance Sheet:
Total assets	$	6,467,818			$	6,521,489			$	6,491,061			$	6,467,818			$	6,491,061
Loans held for investment, net of unearned income		4,065,969				4,018,649				3,746,289				4,065,969				3,746,289
Total securities		1,958,521				2,003,089				2,299,887				1,958,521				2,299,887
Total deposits		5,363,324				5,445,447				5,476,782				5,363,324				5,476,782
Short-term borrowings		373,956				362,054				304,536				373,956				304,536
Long-term debt		124,526				125,752				154,190				124,526				154,190
Total shareholders' equity		505,411				501,341				472,229				505,411				472,229
Average Balance Sheet:
Average total assets	$	6,452,815			$	6,465,810			$	6,457,647			$	6,480,636			$	6,152,390
Average total loans		4,019,852				4,003,717				3,673,379				3,964,119				3,416,600
Average total deposits		5,379,871				5,454,517				5,507,482				5,459,749				5,246,183
Financial Ratios:
Return on average assets		0.56	%			0.47	%			1.13	%			0.37	%			0.97	%
Return on average equity		7.14	%			6.03	%			14.56	%			4.81	%			11.81	%
Return on average tangible equity(1)		9.68	%			8.50	%			19.32	%			7.03	%			15.28	%
Efficiency ratio(1)		66.06	%			71.13	%			53.67	%			66.40	%			56.70	%
Net interest margin, tax equivalent(1)		2.35	%			2.52	%			3.08	%			2.54	%			2.92	%
Loans to deposits ratio		75.81	%			73.80	%			68.40	%			75.81	%			68.40	%
Common equity ratio		7.81	%			7.69	%			7.28	%			7.81	%			7.28	%
Tangible common equity ratio(1)		6.54	%			6.40	%			5.90	%			6.54	%			5.90	%
Credit Risk Profile:
Total nonperforming loans	$	28,987			$	14,448			$	25,963			$	28,987			$	25,963
Nonperforming loans ratio		0.71	%			0.36	%			0.69	%			0.71	%			0.69	%
Total nonperforming assets	$	28,987			$	14,448			$	26,066			$	28,987			$	26,066
Nonperforming assets ratio		0.45	%			0.22	%			0.40	%			0.45	%			0.40	%
Net charge-offs	$	451			$	897			$	588			$	1,681			$	3,091
Net charge-off ratio		0.04	%			0.09	%			0.06	%			0.06	%			0.12	%
Allowance for credit losses	$	51,600			$	50,400			$	52,100			$	51,600			$	52,100
Allowance for credit losses ratio		1.27	%			1.25	%			1.39	%			1.27	%			1.39	%
Allowance for credit losses to nonaccrual ratio		178.63	%			355.03	%			208.18	%			178.63	%			208.18	%

 (1) Non-GAAP measure. See the Non-GAAP Measures section for a reconciliation to the most directly comparable GAAP measure.  

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIESAVERAGE BALANCE SHEET AND YIELD ANALYSIS

	Three Months Ended
	September 30, 2023									June 30, 2023									September 30, 2022
(Dollars in thousands)	AverageBalance			InterestIncome/Expense			AverageYield/Cost			AverageBalance			InterestIncome/Expense			AverageYield/Cost			Average Balance			InterestIncome/Expense			AverageYield/Cost
ASSETS
Loans, including fees (1)(2)(3)	$	4,019,852		$	52,605		5.19	%		$	4,003,717		$	50,439		5.05	%		$	3,673,379		$	41,124		4.44	%
Taxable investment securities		1,637,259			9,526		2.31	%			1,698,003			9,734		2.30	%			1,939,517			10,635		2.18	%
Tax-exempt investment securities (2)(4)		341,330			2,234		2.60	%			345,934			2,253		2.61	%			431,898			2,922		2.68	%
Total securities held for investment(2)		1,978,589			11,760		2.36	%			2,043,937			11,987		2.35	%			2,371,415			13,557		2.27	%
Other		34,195			374		4.34	%			9,078			68		3.00	%			6,070			9		0.59	%
Total interest earning assets(2)	$	6,032,636		$	64,739		4.26	%		$	6,056,732		$	62,494		4.14	%		$	6,050,864		$	54,690		3.59	%
Other assets		420,179									409,078									406,783
Total assets	$	6,452,815								$	6,465,810								$	6,457,647
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest checking deposits	$	1,354,597		$	2,179		0.64	%		$	1,420,741		$	1,971		0.56	%		$	1,725,000		$	1,463		0.34	%
Money market deposits		1,112,149			7,402		2.64	%			999,436			5,299		2.13	%			1,016,005			1,268		0.50	%
Savings deposits		603,628			749		0.49	%			603,905			288		0.19	%			710,836			297		0.17	%
Time deposits		1,403,504			12,798		3.62	%			1,490,332			12,559		3.38	%			913,307			2,007		0.87	%
Total interest bearing deposits		4,473,878			23,128		2.05	%			4,514,414			20,117		1.79	%			4,365,148			5,035		0.46	%
Securities sold under agreements to repurchase		66,020			85		0.51	%			159,583			423		1.06	%			144,628			228		0.63	%
Other short-term borrowings		277,713			3,634		5.19	%			132,495			1,695		5.13	%			83,086			539		2.57	%
Short-term borrowings		343,733			3,719		4.29	%			292,078			2,118		2.91	%			227,714			767		1.34	%
Long-term debt		125,737			2,150		6.78	%			135,329			2,153		6.38	%			159,125			1,886		4.70	%
Total borrowed funds		469,470			5,869		4.96	%			427,407			4,271		4.01	%			386,839			2,653		2.72	%
Total interest bearing liabilities	$	4,943,348		$	28,997		2.33	%		$	4,941,821		$	24,388		1.98	%		$	4,751,987		$	7,688		0.64	%
Noninterest bearing deposits		905,993									940,103									1,142,334
Other liabilities		95,408									78,898									64,063
Shareholders’ equity		508,066									504,988									499,263
Total liabilities and shareholders’ equity	$	6,452,815								$	6,465,810								$	6,457,647
Net interest income(2)				$	35,742								$	38,106								$	47,002
Net interest spread(2)							1.93	%								2.16	%								2.95	%
Net interest margin(2)							2.35	%								2.52	%								3.08	%
Total deposits(5)	$	5,379,871		$	23,128		1.71	%		$	5,454,517		$	20,117		1.48	%		$	5,507,482		$	5,035		0.36	%
Cost of funds(6)							1.97	%								1.66	%								0.52	%

(1) Average balance includes nonaccrual loans.(2) Tax equivalent. The federal statutory tax rate utilized was 21%.(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $141 thousand, $79 thousand, and $35 thousand for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively. Loan purchase discount accretion was $791 thousand, $1.0 million, and $2.0 million for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively. Tax equivalent adjustments were $735 thousand, $713 thousand, and $673 thousand for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively. The federal statutory tax rate utilized was 21%.(4) Interest income includes tax equivalent adjustments of $432 thousand, $431 thousand, and $596 thousand for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively. The federal statutory tax rate utilized was 21%.(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.

MIDWESTONE FINANCIAL GROUP, INC. AND SUBSIDIARIESAVERAGE BALANCE SHEET AND YIELD ANALYSIS

	Nine Months Ended
	September 30, 2023												September 30, 2022
(Dollars in thousands)	AverageBalance				InterestIncome/Expense				AverageYield/Cost				AverageBalance				InterestIncome/Expense				AverageYield/Cost
ASSETS
Loans, including fees (1)(2)(3)	$	3,964,119			$	150,250				5.07	%		$	3,416,600			$	106,297				4.16	%
Taxable investment securities		1,714,912				29,704				2.32	%			1,899,907				28,334				1.99	%
Tax-exempt investment securities (2)(4)		361,254				7,136				2.64	%			440,542				8,895				2.70	%
Total securities held for investment(2)		2,076,166				36,840				2.37	%			2,340,449				37,229				2.13	%
Other		22,741				686				4.03	%			25,972				77				0.40	%
Total interest earning assets(2)	$	6,063,026			$	187,776				4.14	%		$	5,783,021			$	143,603				3.32	%
Other assets		417,610												369,369
Total assets	$	6,480,636											$	6,152,390
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest checking deposits	$	1,429,804			$	5,999				0.56	%		$	1,642,849			$	3,713				0.30	%
Money market deposits		1,014,708				15,970				2.10	%			991,338				2,338				0.32	%
Savings deposits		620,011				1,309				0.28	%			671,917				863				0.17	%
Time deposits		1,437,122				35,286				3.28	%			877,923				4,204				0.64	%
Total interest bearing deposits		4,501,645				58,564				1.74	%			4,184,027				11,118				0.36	%
Securities sold under agreements to repurchase		123,512				958				1.04	%			152,663				435				0.38	%
Other short-term borrowings		174,448				6,665				5.11	%			42,952				680				2.12	%
Short-term borrowings		297,960				7,623				3.42	%			195,615				1,115				0.76	%
Long-term debt		133,375				6,427				6.44	%			148,053				4,975				4.49	%
Total borrowed funds		431,335				14,050				4.36	%			343,668				6,090				2.37	%
Total interest bearing liabilities	$	4,932,980			$	72,614				1.97	%		$	4,527,695			$	17,208				0.51	%
Noninterest bearing deposits		958,104												1,062,156
Other liabilities		85,650												54,775
Shareholders’ equity		503,902												507,764
Total liabilities and shareholders’ equity	$	6,480,636											$	6,152,390
Net interest income(2)					$	115,162											$	126,395
Net interest spread(2)										2.17	%											2.81	%
Net interest margin(2)										2.54	%											2.92	%
Total deposits(5)	$	5,459,749			$	58,564				1.43	%		$	5,246,183			$	11,118				0.28	%
Cost of funds(6)										1.65	%											0.41	%

(1) Average balance includes nonaccrual loans.(2) Tax equivalent. The federal statutory tax rate utilized was 21%.(3) Interest income includes net loan fees, loan purchase discount accretion and tax equivalent adjustments. Net loan fees were $315 thousand and $678 thousand for the nine months ended September 30, 2023 and September 30, 2022, respectively. Loan purchase discount accretion was $3.0 million and $3.3 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. Tax equivalent adjustments were $2.2 million and $1.8 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. The federal statutory tax rate utilized was 21%.(4) Interest income includes tax equivalent adjustments of $1.4 million and $1.8 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. The federal statutory tax rate utilized was 21%.(5) Total deposits is the sum of total interest-bearing deposits and noninterest bearing deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.(6) Cost of funds is calculated as annualized total interest expense divided by the sum of average total deposits and borrowed funds.

Non-GAAP Measures

This earnings release contains non-GAAP measures for tangible common equity, tangible book value per share, tangible common equity ratio, return on average tangible equity, net interest margin (tax equivalent), core net interest margin, loan yield (tax equivalent), core yield on loans, efficiency ratio, and adjusted earnings. Management believes these measures provide investors with useful information regarding the Company’s profitability, financial condition and capital adequacy, consistent with how management evaluates the Company’s financial performance. The following tables provide a reconciliation of each non-GAAP measure to the most comparable GAAP measure.

Tangible Common Equity/Tangible Book Value per Share/Tangible Common Equity Ratio		September 30,				June 30,				March 31,				December 31,				September 30,
(Dollars in thousands, except per share data)			2023				2023				2023				2022				2022
Total shareholders’ equity		$	505,411			$	501,341			$	500,650			$	492,793			$	472,229
Intangible assets, net			(87,987	)			(89,446	)			(91,040	)			(92,792	)			(94,563	)
Tangible common equity		$	417,424			$	411,895			$	409,610			$	400,001			$	377,666
Total assets		$	6,467,818			$	6,521,489			$	6,409,952			$	6,577,876			$	6,491,061
Intangible assets, net			(87,987	)			(89,446	)			(91,040	)			(92,792	)			(94,563	)
Tangible assets		$	6,379,831			$	6,432,043			$	6,318,912			$	6,485,084			$	6,396,498
Book value per share		$	32.21			$	31.96			$	31.94			$	31.54			$	30.23
Tangible book value per share(1)		$	26.60			$	26.26			$	26.13			$	25.60			$	24.17
Shares outstanding			15,691,738				15,685,123				15,675,325				15,623,977				15,622,825
Common equity ratio			7.81	%			7.69	%			7.81	%			7.49	%			7.28	%
Tangible common equity ratio(2)			6.54	%			6.40	%			6.48	%			6.17	%			5.90	%

(1) Tangible common equity divided by shares outstanding.(2) Tangible common equity divided by tangible assets.

		Three Months Ended												Nine Months Ended
Return on Average Tangible Equity		September 30,				June 30,				September 30,				September 30,				September 30,
(Dollars in thousands)			2023				2023				2022				2023				2022
Net income		$	9,138			$	7,594			$	18,317			$	18,129			$	44,833
Intangible amortization, net of tax(1)			1,095				1,196				1,342				3,605				3,224
Tangible net income		$	10,233			$	8,790			$	19,659			$	21,734			$	48,057
Average shareholders’ equity		$	508,066			$	504,988			$	499,263			$	503,902			$	507,764
Average intangible assets, net			(88,699	)			(90,258	)			(95,499	)			(90,308	)			(87,318	)
Average tangible equity		$	419,367			$	414,730			$	403,764			$	413,594			$	420,446
Return on average equity			7.14	%			6.03	%			14.56	%			4.81	%			11.81	%
Return on average tangible equity(2)			9.68	%			8.50	%			19.32	%			7.03	%			15.28	%

(1) The combined income tax rate utilized was 25%.(2) Annualized tangible net income divided by average tangible equity.

Net Interest Margin, Tax Equivalent/		Three Months Ended												Nine Months Ended
Core Net Interest Margin		September 30,				June 30,				September 30,				September 30,				September 30,
(Dollars in thousands)			2023				2023				2022				2023				2022
Net interest income		$	34,575			$	36,962			$	45,733			$	111,613			$	122,794
Tax equivalent adjustments:
Loans(1)			735				713				673				2,164				1,782
Securities(1)			432				431				596				1,385				1,819
Net interest income, tax equivalent		$	35,742			$	38,106			$	47,002			$	115,162			$	126,395
Loan purchase discount accretion			(791	)			(984	)			(2,015	)			(2,964	)			(3,275	)
Core net interest income		$	34,951			$	37,122			$	44,987			$	112,198			$	123,120
Net interest margin			2.27	%			2.45	%			3.00	%			2.46	%			2.84	%
Net interest margin, tax equivalent(2)			2.35	%			2.52	%			3.08	%			2.54	%			2.92	%
Core net interest margin(3)			2.30	%			2.46	%			2.95	%			2.47	%			2.85	%
Average interest earning assets		$	6,032,636			$	6,056,732			$	6,050,864			$	6,063,026			$	5,783,021

(1) The federal statutory tax rate utilized was 21%.(2) Annualized tax equivalent net interest income divided by average interest earning assets.(3) Annualized core net interest income divided by average interest earning assets.

		Three Months Ended												Nine Months Ended
Loan Yield, Tax Equivalent / Core Yield on Loans		September 30,				June 30,				September 30,				September 30,				September 30,
(Dollars in thousands)			2023				2023				2022				2023				2022
Loan interest income, including fees		$	51,870			$	49,726			$	40,451			$	148,086			$	104,515
Tax equivalent adjustment(1)			735				713				673				2,164				1,782
Tax equivalent loan interest income		$	52,605			$	50,439			$	41,124			$	150,250			$	106,297
Loan purchase discount accretion			(791	)			(984	)			(2,015	)			(2,964	)			(3,275	)
Core loan interest income		$	51,814			$	49,455			$	39,109			$	147,286			$	103,022
Yield on loans			5.12	%			4.98	%			4.37	%			4.99	%			4.09	%
Yield on loans, tax equivalent(2)			5.19	%			5.05	%			4.44	%			5.07	%			4.16	%
Core yield on loans(3)			5.11	%			4.95	%			4.22	%			4.97	%			4.03	%
Average loans		$	4,019,852			$	4,003,717			$	3,673,379			$	3,964,119			$	3,416,600

(1) The federal statutory tax rate utilized was 21%.(2) Annualized tax equivalent loan interest income divided by average loans.(3) Annualized core loan interest income divided by average loans.

		Three Months Ended												Nine Months Ended
Efficiency Ratio		September 30,				June 30,				September 30,				September 30,				September 30,
(Dollars in thousands)			2023				2023				2022				2023				2022
Total noninterest expense		$	31,544			$	34,919			$	34,623			$	99,782			$	98,348
Amortization of intangibles			(1,460	)			(1,594	)			(1,789	)			(4,806	)			(4,299	)
Merger-related expenses			(11	)			—				(763	)			(147	)			(1,792	)
Noninterest expense used for efficiency ratio		$	30,073			$	33,325			$	32,071			$	94,829			$	92,257
Net interest income, tax equivalent(1)		$	35,742			$	38,106			$	47,002			$	115,162			$	126,395
Plus: Noninterest income			9,861				8,746				12,588				14,561				36,579
Less: Investment securities (losses) gains, net			79				(2	)			(163	)			(13,093	)			272
Net revenues used for efficiency ratio		$	45,524			$	46,854			$	59,753			$	142,816			$	162,702
Efficiency ratio (2)			66.06	%			71.13	%			53.67	%			66.40	%			56.70	%

(1) The federal statutory tax rate utilized was 21%.(2) Noninterest expense adjusted for amortization of intangibles and merger-related expenses divided by the sum of tax equivalent net interest income, noninterest income and net investment securities gains.

		Three Months Ended												Nine Months Ended
Adjusted Earnings		September 30,				June 30,				September 30,				September 30,				September 30,
(Dollars in thousands, except per share data)			2023				2023				2022				2023				2022
Net income		$	9,138			$	7,594			$	18,317			$	18,129			$	44,833
After tax loss on sale of debt securities(1)			—				—				125				9,837				—
Adjusted earnings		$	9,138			$	7,594			$	18,442			$	27,966			$	44,833
Weighted average diluted common shares outstanding			15,711				15,689				15,654				15,696				15,686
Earnings per common share
Earnings per common share - diluted		$	0.58			$	0.48			$	1.17			$	1.15			$	2.86
Adjusted earnings per common share - diluted (2)		$	0.58			$	0.48			$	1.18			$	1.78			$	2.86

(1) The income tax rate utilized was 25.3%.(2) Adjusted earnings divided by weighted average diluted common shares outstanding.

Category: Earnings

This news release may be downloaded from https://www.midwestonefinancial.com/corporate-profile/default.aspx

Source: MidWestOne Financial Group, Inc.

Industry: Banks

Contact:
	Charles N. Reeves		Barry S. Ray
	Chief Executive Officer		Chief Financial Officer
	319.356.5800		319.356.5800